7 Hidden Fees Your HOA Manager Is Not Telling You About

What every board member should know before the next contract renewal 

A board in a 280 unit community thought they were paying their management company fairly. Over seven years, their books showed about thirty four thousand dollars in clearly disclosed management fees. After an audit, they discovered something shocking. More than one hundred twenty seven thousand dollars had gone to the manager through quiet side arrangements and hidden revenue streams that were never spelled out in the contract.

Late fees kept by the manager. Vendor kickbacks. Banking rebates. Technology markups. Exit fees relabeled as “administrative costs.”

When the board confronted their manager, they were told, “This is standard industry practice.”

If you are on an HOA or condo board, you need to know what you are really paying for management. The monthly “base” fee is only one part of the story. Hidden fees and undisclosed revenue streams can easily add between twenty and forty percent to your true management cost each year.

Below are seven of the most common ways this happens and what a transparent approach should look like.

1. Bank Revenue Sharing And Quiet Rebates

Your operating and reserve funds might total hundreds of thousands of dollars. Where that money sits and who benefits from it can quietly cost your community thousands of dollars every year.

Many management companies place HOA funds in bank programs that pay them rebates, credits, or shared earnings, while the HOA receives little or no interest. In some cases, reserves sit in non interest bearing accounts while the management company collects earnings credits behind the scenes.

For a community with about two hundred thousand dollars in reserves, this can mean two to six thousand dollars per year in lost earnings that should have gone back into the community. Over five years, that is real money left on the table.

A transparent manager will:

• Refuse bank incentives, rebates, or revenue sharing

• Ensure all interest belongs one hundred percent to the HOA

• Provide quarterly reports on bank fees and interest

• Keep accounts in the HOA’s name with clear board oversight

Key questions for your manager:

• Do you receive any compensation, credits, or rebates from our bank

• What interest rate are our reserves earning today

• Who is the legal owner on our accounts

• Can we see the banking agreements

2. Vendor Invoice Markups And Kickbacks

Your vendor list often represents the largest part of your budget. Landscaping, pool, maintenance, asphalt, roofing, security and more.

Some management companies quietly mark up vendor invoices or accept referral fees from “preferred” vendors. Vendors then build those fees into their pricing. A ten to fifteen percent markup on one hundred thousand dollars in annual vendor spend can cost your community between five and fifteen thousand dollars every year.

In one real example, an HOA needed asphalt repairs. The manager’s preferred vendor bid forty two thousand five hundred dollars. When the board requested additional bids, they received quotes of thirty three thousand eight hundred and thirty one thousand two hundred. The preferred vendor was twenty one to twenty six percent higher. The manager admitted the vendor paid them a twelve percent referral fee. The board saved over eleven thousand dollars by choosing the lowest qualified bid.

A transparent manager will:

• Pass through vendor invoices at actual cost without markups

• Put all significant projects through a written three bid policy

• Provide original vendor invoices with every payment

• Refuse commissions, referral fees, or kickbacks from vendors

3. Late Fees The Manager Quietly Keeps

Late fees are intended to offset the cost of delinquency and protect the association’s finances. In many communities, late fees can total several thousand dollars a year.

Yet many management companies keep fifty to one hundred percent of all late fees collected even when the governing documents do not authorize this. Some also add separate “late administration” fees that never reach the HOA. For a two hundred unit community, this can mean three to eight thousand dollars per year that should have gone to your association’s bottom line.

A transparent manager will:

• Allow the HOA to keep one hundred percent of late fees

• Avoid tacking on vague “late admin” surcharges

• Provide clear monthly reports showing every late fee, who paid it, and where it went

• Accept responsibility if their own delay causes a late vendor payment and cover the penalty themselves

4. Technology Per Door Fees

Online portals, apps, and e signature tools are now standard in HOA management. Some companies, however, treat basic technology as a profit center.

It is common to see separate “technology fees” of two to five dollars per unit per month layered on top of the base management fee, along with extra charges for owner portals, board portals, or e signature use. For a two hundred unit community, that can add four thousand eight hundred to twelve thousand dollars every year.

A transparent manager will:

• Include owner and board portals in the base service

• Include basic e notices and e signatures without per user fees

• Avoid separate per door technology charges

5. Postage, Printing, And Supplies With Markups

Mailings cannot be avoided. Budgets, notices, violation letters, coupon books and ballots all need to reach your owners.

Many management companies add ten to thirty percent or more on top of actual postage, printing, and supply costs. You might see inflated postage charges, “handling fees,” premium copy rates, or a recurring line labeled simply “office supplies.”

For many communities this can add fifteen hundred to four thousand dollars per year in unnecessary expense.

A transparent manager will:

• Bill postage and printing at actual cost

• Avoid adding administrative fees to standard mailings

• Provide vendor invoices for these costs upon request

• Spell out how these costs are handled in the contract

6. Transition, Exit, And Contract Trap Fees

The way a contract ends often reveals a lot about a management company’s ethics.

Some managers charge substantial “transition” fees when the relationship ends. Data export fees, per page copying fees for records, early termination penalties, per door transition charges, and other add ons can quickly reach several thousand dollars when a board decides to make a change. Many hide these charges in vague language and pair them with auto renewal provisions that require ninety days or more notice.

A transparent manager will:

• Clearly state any transition fee up front in the contract

• Avoid charging for standard data exports or record transfer

• Limit early termination penalties and spell out conditions in plain language

• Provide a simple thirty day transition plan so the community can move on smoothly if needed

7. Collections Revenue Sharing

Collections should protect the association while treating homeowners fairly. When a management company has a financial incentive tied to collections, this balance can disappear.

Some companies receive a portion of attorney fees, late fees, or collection agency charges. Others have revenue sharing arrangements with specific law firms. This can encourage quick escalation to legal action, increasing homeowner debt and tension in the community.

A transparent manager will:

• Refuse any revenue share or kickbacks from attorneys or collection agencies

• Allow the HOA to keep all late fees and clearly understand all legal costs

• Follow a board approved collections policy that is fair, consistent, and focused on resolving delinquency, not creating profit

What These Hidden Fees Really Add Up To

Consider a typical two hundred unit HOA paying two thousand five hundred dollars per month in base management fees, or thirty thousand dollars per year. When you layer in bank rebates, vendor markups, late fees kept by the manager, technology per door charges, postage markups, exit fees, and collections revenue sharing, the true cost can easily rise by eighteen thousand three hundred to more than fifty three thousand dollars annually.

In other words, you might be paying between sixty one percent and one hundred seventy seven percent more for management than you think. 7 hidden fees full educational

Red Flag Checklist For Your Current Management Company

Use this quick list in your next board meeting. Check any that apply.

• Your reserve funds earn zero or very low interest

• The manager recommends the same vendors every time no matter the price

• You never see a clear monthly breakdown of late fees and where they go

• You are charged a separate per door technology fee

• Postage and mailing charges seem high and are not itemized

• Your contract has vague language about exit or transition fees

• Collections feel aggressive or escalate quickly to attorneys

• The manager becomes defensive when you ask about vendor relationships

• You see processed or summary invoices instead of original vendor invoices

• Your contract auto renews and requires more than ninety days notice to cancel

• You have never seen the banking agreement tied to your HOA’s accounts

• The manager resists competitive bidding on projects

If you checked:

• 0 to 2 items: Your relationship may be relatively transparent, but it is still wise to ask questions

• 3 to 5 items: You have significant concerns and should request written disclosures

• 6 to 8 items: There are multiple red flags and it may be time to issue an RFP

• 9 or more items: You are likely paying substantial hidden fees and should explore alternatives immediately

Get The Complete HOA Management Transparency Questionnaire

These seven categories are only the beginning. There are fourteen total areas of questioning that boards should use when evaluating or renewing management contracts.

Our full HOA Management RFP Questionnaire includes:

• Eighty six specific questions across fourteen categories

• Sample answers that show what full transparency looks like

• A comparison guide that helps you identify vague, evasive, or misleading responses

You can use it with your current manager, with prospective firms, or as part of your next RFP process. There is no obligation and no sales pressure. Just clear tools to help your board protect the community’s money and choose a management partner that truly aligns with your values.